What are the advantages and disadvantages for Galawi of Dansk's presence in the country?.
Advantages for Galawi of Dansk's presence in their country.
Dansk provides 300 people with jobs in Galawi.
Dansk brought in $1 million from their exports last year and that foreign exchange helped to pay for oil imports.
Dansk agreed not to take out any profits for five more years. They are reinvesting their profits. Their operation is growing, they are hiring more people, reducing imports because they are making more components of their products locally, and they are expanding their exports.
The unions are happy. They love the fact that their members get better pay at Dansk and other union members at other firms are happy because the firms have been forced to compete in the labor market. Keeping the unions happy avoids strikes, civil unrest and even public demonstrations.
Dansk is training many people from unskilled laborers to middle management. .
Dansk offers six (6) scholarships annually to local employees" families to study engineering or business administration in Denmark.
Dansk has brought never seen before technology to Galawi.
For every Gf spent by Dansk, the multiplier effect is almost two. .
A potential advantage is after the 5 years, Dansk will pay a 50% higher tax rate.
Disadvantages for Galawi of Dansk's presence in their country.
For the next 5 years, Dansk still has the special tax concession., therefore they are not making as much tax on Dansk as they are from their local businesses, which are complaining to Galawi.
Dansk is consuming foregin exchange, about 40%.
Leaders of the opposition are making speeches about the fact that Dansk is bleeding heir country with all the money that they are taking out of Galawi, which could cause political unrest. .
Other businesses are also complaining about the higher wages that Dansk pays. In essence, they feel Dansk is stealing their employees.
A potential disadvantage might be inflation caused by Dansk's pay scale being higher than other companies.